Public sector lender, Allahabad Bank has raised its Benchmark Prime Lending Rate (BPLR) by 50 basis points. The BPLR of the bank now stands at 12.50%.

RBI's repo as well as reverse repo rate hike has been instrumental in banks' increasing their lending rates. Moreover, it seems to be another measure adopted by banks to push borrowers towards base rate system of lending.

Although BPLR gave way to base rate system of lending with effect from July 2010, but it is applicable only for the new set of loans and those which come up for renewal. Old loans are still under BPLR unless the customer chooses to switch to base rate. Banks had requested RBI to evanish BPLR system in totality but the request received a rejection.

"The bank has decided to increase its BPLR by 50 basis points to 12.50 per cent with effect from August 16," Allahabad Bank said in a filing to the Bombay Stock Exchange.

The lender follows suit of many other banks which have already hiked their lending rates. These include Punjab National Bank, Bank of Baroda, Union Bank of India, Corporation Bank, UCO Bank and IDBI Bank.